Credit Suisse Sues REI Agro in Singapore Over Alleged Loan Fraud for non-existent trades of the staple using a web of sham rice-trading companies in Singapore and Hong Kong

http://www.bloomberg.com/news/print/2015-01-20/credit-suisse-sues-rei-agro-in-singapore-over-alleged-loan-fraud.html

Credit Suisse Sues REI Agro in Singapore Over Alleged Loan Fraud

By Andrea Tan – Jan 19, 2015

Credit Suisse Group AG (CSGN) sued REI Agro Ltd. (REIA) in Singapore claiming the Indian basmati rice producer and 16 related companies conspired to get loans for non-existent trades of the staple. REI Agro founders Sandip and Sanjay Jhunjhunwala used a web of sham rice-trading companies in Singapore and Hong Kong to support a 2012 $115.5 million loan agreement by REI Agro’s Dubai-based Ammalay Commoditiess JLT, according to a lawsuit in the Singapore High Court.Credit Suisse, leading a group of lenders who are seeking at least $80 million in damages, said in the October suit that the loan agreement was breached when Ammalay failed to provide audited accounts and defaulted on a $20 million payment. Sanjay Jhunjhunwala said in November court filings that trades by his two companies being sued were genuine and denied involvement in any fraud. The next hearing is scheduled for Jan. 26.

New Delhi-based REI Agro, which guaranteed the loan, and Ammalay haven’t filed their defenses and didn’t respond to e-mails seeking comment. Eugene Thuraisingam and Muralli Rajaram, lawyers for eight other companies being sued, declined to comment, as did Credit Suisse.

The lenders have an “overly suspicious approach” and misunderstood the trades, Sanjay, who was succeeded as REI Agro chairman last year by his younger brother Sandip, said in his court filing.

The Jhunjhunwalas are Marawari Indians who are known to be risk takers and sometimes adopt unconventional business practices, he said.

REI Agro has the equivalent of $318 million of debt due by the end of 2017, of which 80 percent comprises loans, data complied by Bloomberg shows. Both Fitch and Standard & Poor’s withdrew their ratings on REI Agro’s debt last year.

REI Agro rose 3.9 percent to close at 1.35 rupees yesterday. The stock has slumped 81 percent in the past 12 months.

The case is Credit Suisse AG, Singapore branch v Ammalay Commoditiess JLT, S840/2014. Singapore High Court.

To contact the reporter on this story: Andrea Tan in Singapore at atan17@bloomberg.net

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